Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting downward
C. Aggregate demand shifting rightward
D. Aggregate demand shifting leftward
Answer: B
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Net exports usually ________ when the U.S. economy is in a recession and ________ when the U.S. economy is expanding
A) increase; increase B) decrease; decrease C) decrease; increase D) increase; decrease
Perfectly competitive firms ____ earn zero economic profit in long-run equilibrium because ____
a. always; firms in perfectly competitive industries always maximize output and so flood the market until the equilibrium price of output is driven to zero b. sometimes; the demand curve for an individual perfectly competitive firm may or may not cross the company's long-run average total cost curve at its lowest point c. always; firms enter whenever their economic profit is positive and exit whenever it's negative, so in long-run equilibrium economic profit must always be zero d. never; no firm would be willing to produce if it received zero economic profit
A common argument in favor of restricting international trade in good x is based on the premise that
a. international trade reduces total surplus in countries that export good x. b. international trade reduces total surplus in countries that import good x. c. international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another. d. trade restrictions can be useful when one country bargains with its trading partners.
Goods that are subject to excludability provide examples of private goods.
Answer the following statement true (T) or false (F)